Home » Copyright/Intellectual Property » Supreme Court Rules Against Aereo in Broadcasters’ Challenge

Supreme Court Rules Against Aereo in Broadcasters’ Challenge

25 June 2014

From USA Today:

The Supreme Court blocked an innovative Internet streaming service Wednesday from potentially upending the way Americans watch television.

The justices sided 6-3 with the nation’s major TV networks and cable companies against Aereo, an Internet startup that rebroadcasts live programs to subscribers without paying retransmission fees.

. . . .

Aereo had argued that it differed from cable and satellite services because each subscriber is assigned an individual, dime-sized antenna, often stored on rooftop circuit boards. But a majority of justices saw those antennas as just a way around copyright laws.

“Aereo’s system is, for all practical purposes, identical to a cable system,” Justice Stephen Breyer wrote for the majority. “Both use their own equipment. Both receive broadcast television programs, many of which are copyrighted. Both enable subscribers to watch those programs virtually as they are being broadcast.”

In making their limited ruling against Aereo, the justices stressed that new technologies such as cloud computing should not feel constrained. During oral arguments in April, Aereo’s attorney, David Frederick, said “the cloud-computing industry is freaked out about this case.”

“We believe that resolution of questions about cloud computing, remote storage DVRs, and other novel matters not now before us should await a case in which they are clearly presented,” Breyer said.

Link to the rest at USA Today and thanks to Joshua for the tip.

PG thought Aero had done a masterful job of designing its system around copyright law as construed in prior Supreme Court opinions but, obviously, he (along with three Supreme Court justices) was wrong.

The case does illustrate one way of responding to disruptive technology – having it declared illegal.

Copyright/Intellectual Property

37 Comments to “Supreme Court Rules Against Aereo in Broadcasters’ Challenge”

  1. I am disappointed in this ruling. The truth is exactly what you said. They were providing a solution to a problem that needed to be solved, and without saying the Court got bought, well… 🙁

    • You do not become a Supreme Court Justice if you are the kind of person who can be bought. I don’t mean that integrity is somehow magically guaranteed. I mean that if you are that brilliant and hardworking and end up on the Supreme Court, you don’t *care* about money enough to be bought.

      And this isn’t over. Aereo might be able to escape by any number of means, including possibly something as simple as selling the subscribers the antennas outright. Aereo’s ownership of the entire distribution network was probably something the Justices gave a lot of weight to in analogizing them to a cable company.

      • There was a time in my life when I earnestly believed the Justices were all goodness and light and incorruptible. A fair few of their decisions in the last 15 years have made me doubt it.

        • I don’t think they’re good, light, or incorruptible. I think bribing them would not work. At least, not with money.

          • Unless you’re Clarence Thomas, and then you’re totally cool with Harlan Crow sinking half a mil into your side projects, among other ethics issues.

        • Agreed Mia; the cheney=duckhunting with a supreme, did it for many of us. In ethics, esp re lawyers, ‘even the appearance of conflict of interest’ is not to be engaged in. There are many ways to influence a supreme, without using money. Many.All having to do with prestige, belonging, paling around with. Nary a word ever be spoken about matters before the court. Nary a word. There are many ways of communicating without words, in sideways dialogue, or code words, what one wants and what one will give in return.

          • There has been corruption in the Court in the past, but at least sometimes it has been eventually dealt with, such as Fortas’ resignation.

            I think what has disillusioned me so much with the current generation of justices is that they seem to think it’s okay to be unethical and stick around, and Congress is too broken to impeach. It’s basically doing whatever you want and even when you’re publicly exposed for it, flipping the American public off because you know Congress won’t impeach you. Not all of the Justices appear have ethics issues, but the ones that don’t aren’t doing much about the ones that do. (A failure on Roberts’ part too, if you ask me.)

        • The sale of the antenna to the consumer is an interesting idea. They might have to bundle the DVR with it too or offload the DVR functionality onto the consumer. I wonder if they can have a subscription model at all? If not, how do they keep the service a low priced alternative to a cable subscription?

      • The law is complex and complicated. I know a tax attorney who makes her living — and a very good living at that — consulting and litigating ONE LINE of the US tax code. She is the foremost expert on that one line.

        How much do you think she knows about admiralty law?


        The Federal Circuit Court is the appellate court for all matters related to patents and trademarks. That ensures uniformity in patent and trademark law across the US. Before the establishment of the Fed Circuit, the law differed from circuit to circuit. (Most notably the 1st Circuit in Boston which has always marched to the beat of an epileptic drummer.) To sit on the Fed Circuit, you must be a member of the patent bar, which means you must have a degree in science or engineering. This court has the most restrictive qualifications of any in the US.

        Does a degree in mechanical engineering render you an expert on a biological patent?

        And SCOTUS have appellate jurisdiction even over the Fed Circuit.

        The problem is not that the justices lack integrity. The problem is that they are incompetent to judge most of the law that comes before them. They have no experience with it.

  2. “Corporations today, corporations tomorrow, corporations forever.”–the guiding principle of the Roberts Supreme Court.

    And with no apology whatsoever to George Wallace.

    • Aereo is a company with $97 million in capital and an estimated market worth, before yesterday, of several hundred million dollars. It brings in an estimated $40 million while reaping 77% gross margins (each subscriber, paying $8 to $12 a month, depending on DVR time, costs $2.30 to serve).

      That is more than enough money to hire very high-class lawyers and provide them all the support they need.

      • ‘Several hundred million dollars’ is barely a pimple on the backside of Big Media.

        The only difference I can see between this and our PVR is that we’d be paying someone else to do the recordings so we didn’t have to. To claim that’s illegal is just another kick in the a** to the US ‘Cloud’ industry that’s already struggling thanks to the NSA.

        • There comes a point of diminishing returns in hiring lawyers, as in most things. The fact that Big Media is much bigger than Aereo does not mean that Aereo was fundamentally unable to defend itself competently in the court system. It had wonderful lawyers who had all the resources they needed. They managed to win in the DC and in the CA, which shows that they were on the ball and gave as good as they got, lawyer-wise. They took their best shot and they lost.

          Now, when it comes to lobbying Congress, I’ll grant you that Big Media can probably push Aereo to the point where it can’t compete any more. 🙂

          • Aereo also knew coming into its business that litigation was going to be a big and mandatory expense, so I’m certain they budgeted accordingly.

  3. It’s all about money and my guess is Aereo and the networks will soon come to some kind of licensing accommodation.

    Hard to blame the conservatives for this decision though. It was Scalia, Thomas, and Alito who supported Aereo and the liberals with Roberts who supported a stricter interpretation of the copyright law.

    It was very reassuring to me that they voted 9-0 to protect smartphones from warrantless searches. So all is not lost.

  4. “PG thought Aero had done a masterful job of designing its system around copyright law as construed in prior Supreme Court opinions but, obviously, he (along with three Supreme Court justices) was wrong.”

    I think ‘wrong’ is not the best word. I would suggest ‘outvoted’.

  5. 900+/- M is not a lot of money considering the billions and billions that big tourniquet multi-media corps have up against Aereo. Aereo’s president said a downvote from the Supremes would kill Aereo. I imagine a big gulp corp might try to buy up Aereo’s resources now at discounted prices bec of the Supremes, and Aereo’s top management and shareholders may be willing to take the hit. Aereo is wounded. If it cant spring back and lunge wisely and hard time and again now… well…the jackals are already circling.

  6. Suburbanbanshee

    The really unfair thing, which Aereo partially would have redressed, is that plenty of us live in areas where we had REALLY GOOD tv reception, until the day the new scrambled channels went final. (Heck, my parents even had a descrambler that gave them really fine reception until that day.)

    In my childhood and up until the changeover, we could easily receive all the local tv channels, all the channels in the next city over, and occasionally channels from further afield. 18-19 broadcast channels, with 4 or 5 other occasional ones. Nowadays, we often can’t receive even most of the local channels. Some days, there is no broadcast tv reception whatsoever. Since most of the local stations added extra broadcast channels, we should be able to receive many more, but it just doesn’t work.

    We didn’t move; broadcast TV went away. It’s like trying to listen to a low-power campus radio station when you live a block further out than their broadcast area.

    So why shouldn’t Aereo be able to provide people with TV reception, given that the broadcast bandwidth that used to work fine was so abruptly stolen from us, the people? Seriously, this stinks.

    • Oddly enough, cable television itself was originally created to redress this very problem—someone put up an antenna on a hill and ran wires from it to the TVs of people who lived in the valley. Later on, people got the idea that you could create original channels for these networks and not be limited to the ones that were available off the air.

      I expect there’s probably room in the market for a service that streams TV channels direct to your computer. It would just have to pay the networks for the privilege. But then, it could probably save money by building just one antenna rather than a whole cluster of thousands of them.

      • Suburbanbanshee

        My parents don’t have Internet any more than they have cable. They shouldn’t have to get Internet or cable to receive free broadcast channels.

        And they are _already_ on top of a hill. That’s how come, every so often, we could receive freak transmissions from several hundred miles away, like the time we got some Texas tv station. In Ohio.

        Seriously, you have _no idea_ how freaking screwed up this current system is. I’m not joking when I say that on a bad day, every channel is nothing but static, and they’re supposed to be able to get about thirty. (Or “blue screens,” frozen screens, messed up screens, and all of the above in alternation.)

  7. The problem as I see it is that Aereo was fundamentally created for the sole purpose of making money by exploiting a legal loophole. The lower courts agreed that, yes, that loophole is there and Aereo slides right through it. But apparently the Supreme Court takes a dim view of rules lawyering. It walks like a duck and quacks like a duck, so it doesn’t matter if the feathers are the wrong color.

    When you get right down to it, when the single difference between being legal and illegal is having one antenna versus a whole cluster of them, it’s really kind of a silly technicality anyway.

    • And there are only a few lines of oiled preventing me from copying my legally owned DVD collection to my hard drive, yet they tell me it’s illegal to ignore them and copy anyway.

      The law is built on silly technicalities. It’s practically a requirement.

    • And there are only a few lines of oiled preventing me from copying my legally owned DVD collection to my hard drive, yet they tell me it’s illegal to ignore them and copy anyway.

      The law is built on silly technicalities. It’s practically a requirement.

  8. I must confess that as a Brit I probably do not understand the minutiae of this story, yet most of these posts seem to fall into the “I want to watch my favourite TV without having to pay the people who make them” category. Why? If you won’t pay for them, your must-watch programmes won’t be made.

    I’m baffled so many of you appear to equate this case with the struggle against Big Publishing. All Aereo are doing is retransmitting programmes without permission. Hardly a revolutionary act and obviously very profitable. If they bought or made their own programming using individual filmmakers who earned an income from that process then it would be a strong parallel with indie ebook publishing. But they don’t. They’re parasites. They could do it, just look at the success of YouTube. Then again, how many of those who make a living from their YouTube channels would accept it if they were told their income was falling because their videos were being re-directed and re-streanmed on a profit-making service that did not pass on a chunk of its income to them. Not one.

    A lot of you probably don’t watch much TV or use Aereo, but if you don’t stand alongside the people who earn a living writing and crafting these programmes, you have no moral ground from which to defend your own rights. Sure the big networks make profits but they also pay the people who create the programmes that generate those profits. What would happen if some of you best-selling authors discovered that a rival site to Amazon – say one owned by Hachette – creamed off your most profitable ebook titles, sold them, and then kept the entire profits? I’m willing to bet you would be on the phone to your lawyers in an instant. How about all you struggling indie authors. Imagine you achieve that longed-for breakthrough. Your latest book is selling in vast numbers, but then there’s a big dip in sales. Why? HachetteOnline has struck again. It’s pirated your book, sold it cheaper than you can, and your income drops. And they then did that with every book you publish, driving you back to that hated day-job? What would you do?

    I thought you guys were in favour of creative people making a living from their creativity.

    Yours in disappointment.

    • These programs are advertising paid over the air channels, free to anyone with an antenna. They have been so from day one. The “creative types” AREA getting paid, and they would arguable get paid more if the tv stations were smart enough to capitalize on the fact that a company was, for free, expanding their viewership population.

      This could have been a win-win, instead we see the legacy players doing what they always do, killing off anything they perceive as a threat.

      • Hmm, how about I set up a site, let’s call it CheaperThanAmazon, that sells or gives away your books without your permission. I make my money from sales and/or advertising, you don’t make a penny. Would you really be happy with that?

        Aereo appear to offer the argument of the super-entitled. It’s okay for them to make a profit but not to share it with those who create and own the content they profit from. I cannot see how any author who wants to make a living can support that position.

        • Suburbanbanshee

          Commercials pay for all commercial US television. If you want to get non-broadcast channels or you’re so far out in the country that broadcasts don’t reach, you pay cable or satellite for the privilege of accessing the extra channels. The programming itself on the cable and satellite channels is either free as in beer (and paid for by voluntary private donations and/or public funding), or is paid for by commercials.

          TV producers and actors and writers and such sell their show in syndication (or their distributing company does) to whatever local broadcast or national cable/satellite channel wants to show it (or in the case of some religious or public access programming, they give it away free). The personnel of syndicated shows also receive royalties from the television channels for every rerun of a program (how much and who is depending on their contract).

          And of course, where do the channels get their revenue to be able to buy shows? Commercials!

          So yeah, it’s not like nobody’s paying for TV shows. They’re paid like a zillion times for every viewer. Any time your eyes or a visitor’s eyes stray across a commercial on TV, it’s paid up.

          But of course, it’s more efficient to watch TV on a dedicated (and legal) website, and either subscribe to it or submit to watching a few commercials. No cable or satellite provider, and no assemblage of local broadcasters, is going to be able to have every show you want to watch.

          • Except by that logic, cable TV networks shouldn’t have to pay broadcast stations for carrying their signal, either, but the whole reason Aereo got sued was that they weren’t paying the fees the cable companies were.

        • You really don’t know the first thing about the American over-the-air network tv market, do you?

          • I do, Dustin. I work in broadcast TV, have worked for most of the major US networks and I do understand how the advertising market works. I just wonder why you think it’s okay for a service to profit by giving away someone else’s product without paying them for it? This is why copyright exists. It’s why I cannot set up CheaperThanAmazon.com and resell all your best-sellers without your permission and without paying you. It is how writers make a living.

            I notice that none of the earlier outraged contributors have answered my question. Your silence speaks volumes. I’ll ask it again, but more bluntly. Where did this sense of entitlement come from that means it’s okay for authors to profit from and protect their work but not for everyone else in the creative industries?

            Suburbanbanshee, thanks for the explanation of why Aereo is useful. I understand your frustration. If Aeroe had set up as a not-for-profit to allow remote communities to benefit then I’d respect that and applaud it. But they’re not trying to help, they’re trying to make money.

  9. Where I live now, I have to use an OTA antenna with an added HD TV antenna amplifier just to get 7 channels. It would be nice to have a service like this… like and “Online Antenna”. I don’t have a lot of options.

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